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Why Can Mortgage Rates Rise in a Down Market?
from:With all the hoopla about the overload of inventory in most states (due to foreclosures), and the dropping of interest rates by the Federal Reserve, you may be wondering why mortgage rates haven risen in the past year over all. The mortgage industry is not the same as the banking and the housing industry. They are connected to these two sectors of the market, but lending products are usually priced on their own merits and not just those of the economy.
The Lender’s Point of View
So, while the amount of inventory can affect home prices and spur competition amongst lenders, it can lower the rates if one lender is trying to grab a bit more business. On the other hand, the mortgage crisis has been so severe in some states that many lenders are wary of lending to unreliable borrowers. They have tightened their credit requirements and when you don’t meet those newer requirements, they may raise the rate to hedge their risk. So, even with a market rate of 6.00% on a 30-year fixed rate mortgage, you could still end up paying more if you don’t meet the new credit requirements of a FICO score of 720 or more, solid employment, and a sizable down payment.
The Market’s Point of View
Mortgage rates can also increase, even if the Federal Reserve decides to lower interest rates. This may spur banks to lend out more money and attract more customers. As the new customers start to flood the market, the demand increases. When the demand of any product goes up, so does the price. That’s why the mortgage rates can even increase when the Federal Reserve cuts rates.
Your Point of View
It is very difficult to time to buy a house at the bottom of mortgage rate drop cycles. Typically, you can do this better if you are refinancing than if you are buying because you are then comparing your new loan to whatever you had before. If it saves you money or drops by at least 1 to 2 points of your mortgage interest, then you are pretty confident that buying at that time is a good move. Otherwise, if you are new buyer and have nothing to compare it to, you still can be relatively comforted by the fact that despite rises and falls over the short-term, mortgage rates are at a historically low-point for now in comparison to years past. They may not drop more than 1 point more and should they do so, you can always refinance your mortgage rates later.
Mortgage Fraud News
Delco man charged in $600k mortgage fraud at Shore - Philadelphia Inquirer
Delco man charged in $600k mortgage fraud at Shore Philadelphia Inquirer By Michael Hinkelman A Delaware County man was charged Thursday with joining a mortgage fraud conspiracy that resulted in losses of more than $600000. Federal prosecutors said Michael J. Smith, 31, of Springfield, was a mortgage broker for companies in ... |
Lawsuit seeks to stop Legislature from raiding mortgage fraud settlement - East Valley Tribune
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Hayward man gets three years for mortgage fraud scheme - San Jose Mercury News
Hayward man gets three years for mortgage fraud scheme San Jose Mercury News By Chris De Benedetti SAN FRANCISCO -- A Hayward man was sentenced Wednesday to three years in prison for his role in a $15 million mortgage fraud scheme that involved members of the Hell's Angels, a federal prosecutor said. |
Whistleblowers wanted for mortgage fraud probe - Politico (blog)
 The Nation. (blog) | Whistleblowers wanted for mortgage fraud probe Politico (blog) By DARREN SAMUELSOHN | President Obama's task forcing probing mortgage fraud is offering "substantial financial help" to whistleblowers who help them find the bad guys. "We are particularly interested in information from corporate insiders – that is, ... Mortgage Fraud Investigation Has a Coordinator, but Does It Have White House ... Psst…Seen Any Mortgage-Securities Fraud? Residential Mortgage-Backed Securities (RMBS) Working Group Announces New ... |
Centreville Man Indicted: Mortgage-Fraud Scheme - Virginia Connection Newspapers
Centreville Man Indicted: Mortgage-Fraud Scheme Virginia Connection Newspapers By Bonnie Hobbs Centreville — A Centreville man has been indicted by a federal grand jury for his alleged part in a $1.5 million mortgage-fraud scheme. He is Jea Min Lee, 34. In the four-count indictment returned last Thursday, May 17, Lee is charged ... Fairfax residents plead guilty in $1.5M scheme |